TRX, INC.: Initial Public Offering
INTRODUCTION OF SOME SORTIPOs are not sure things; therefore, when considering going public, one of the most important things to look at is the company’s future growth potential. Investors need the comfort of good future returns before they buy stock. The potential for growth at TRX exists, especially in moving away from customer-care, but the continuous reporting of negative net income poses a problem. Potential buyers will be wary to invest in a company that continues to lose money and has not disclosed a specific use for the money other than general growth purposes. This, compounded with the high cost of an IPO, illustrates the necessity for positive future growth, accompanied with decreasing operating costs, or the IPO will fail. However, operating in an emerging industry within a larger industry that will never disappear (travel), TRX does have the potential to become a front-runner in the market. TRX must capitalize on its positive characteristics, such as developing long-term relationships with customers. But with Expedia, Inc. accounting for 53% of the 2004 revenue, TRX needs to broaden the customer base while simultaneously watching the market for competition. The loss of Expedia, Inc., or another large account, to a competitor would be devastating to the IPO and future of the company. While the potential for a successful IPO exists, TRX has an equal chance of the IPO failing. Their relationship with Sabre Investments, Inc. threatens the uniqueness of TRX. Continuing the relationship could be damaging if TRX is associated with Sabre and not considered an independent operator.

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Financial Engineering
Case Study Written Report
NIKE INC., COST OF CAPITAL
CASE REPORT
Submitted to: Mr. Mieczyslaw Grudzinski
Report date: 27 February 2014
BBA Finance & Accounting
Semester 6, Academic year 2013-2014
Group Member:
Tra My Nguyen 24458
Anna Kulishova 24444
Kaihao Zhang 25545
Zakariae Mokhliss 27727
NIKE INC., COST OF CAPITAL
CASE REPORT
INTRODUCTION
Our group was assigned to produce a report on the Nike Inc.: Cost of Capital case study as a component of Financial Engineering assignments. This case study presented a situation where Ms Kimi Ford, a portfolio manager at North Point Group, was considering buying some shares of Nike Inc. for the fund that she was managing. The reason was, after a quick sensitivity analysis of the discounted cash flow forecast, that she learned that Nike was undervalued at discount rates below 11.17%, which would make it beneficial to acquire its shares. In order to make a decision whether to buy Nike’s shares, she needed the estimation of Nike’s cost of capital. Her assistant, Ms Joanna Cohen, performed an estimation of the cost of capital by the end of the day with a result of 8.4%. Our task was to verify whether her estimation was correct and suggest our own proposal of changes.
CASE ANALYSIS
What our group agrees on with Ms Cohen’s approach is the choice of WACC – Weighted Average Cost of Capital. WACC is one of the most widely used estimation...

...established companies have found to raise quick capital is to make a stock offering. Initial public offerings (IPOs) have historically had very large initial first day gains com- pared to the performance of the rest of the market. Historically, IPOs were underpriced by roughly 16% according to an industry expert at Stein, Roe & Fonham. However, in recent months, some IPOs have seen first day run- ups of as much as 200 to 400 percent, and the trend for the future is likely to increase.
Differences between the IPO offering price and the first day closing price occur too often and are, on average, too large to be explained away by error in auditing practices. If this were the case, then an auditing firm or investment bank would also error on the side of overpricing the stock. Various theories have come to the forefront of this IPO underpricing debate, most of them explaining the pricing of a company’s stock in an IPO in terms of signaling effects as opposed to the fundamental characteristics of the firm and why a risk averse investment bank would be more likely to underprice a stock issue (Matt, 2009). The purpose of this study is to com- bine the leading theories and test them over a given sample of initial public offerings to see how influential non-fundamental factors are on the IPO price and how the characteristics of the IPO change the magnitude of signaling...

...strategic repositioning of the company and the use of the IPO as an exit for minority shareholders affect the attractiveness of the IPO?
The strategic repositioning of the company was to gradually shift away and exist from customer care which TRX generated more than 50% in 2000, and Davis’s long term strategy was to focus on the higher margin sectors, such as data transaction and integrations. By shifting away from customer care, of course would reduce operational cost and increase bottom line for the company but I think it would affect the attractiveness of the IPO in negative way. If I was an investor I would be in agreement with TRX only if they were reducing the customer care due to the high operating cost, but I mean reducing, not totally exist. In the service based company, interacting with end consumers is critical even know it has lower margin but the company should be able to profit from it, if it continues to operate in the future which I believe would create higher customer satisfaction and strong long term relationship with end-consumers. Davis decided to use the strategy to make the financial data looking good or positioning the company for the IPO which he knows that he was going to do in the future because the company need capital to support the firm’s growth, however to exist a sector was not good way to start with the risk that they might have lower customer...

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Top of Form
Netscape IPO
Introduction
The case analyzes the Initial Public Offering (IPO) of Netscape Communications Inc., in order to recommend a justifiable share price for the IPO. Founded in April 1994, Netscape Communications Corporation provided a comprehensive line of client, server and integrated applications software for communications and commerce on the Internet and private Internet Protocol networks. The primary revenue generator for Netscape at the time IPO was it's Internet Browser, Netscape Navigator. In December 1994, Netscape Navigator generated 49% and 65% of total revenues for the quarters ended March 31 1995 and June 30 1995 respectively.
Analysis
Netscape has captured a solid market share following the widespread, and mostly free distribution of the Netscape Navigator Web browser. The exploding growth of Internet and it's wide spread used by companies and individuals stimulated a very high demand for Internet Browsers. Netscape, through it's effective marketing and excellent product innovation was able to capture 60% of the market share and became a market leader. Netscape strategy is to capture market share by giving away it'd Browser product free of cost initially. This is done with a view that once a market leader, it can bundle it's other products and services as addition to Netscape Browser and charge for them. To be successful in the...

...﻿Today I will talk about Facebook; it’s a very topical subject particularly since Facebook submit paperwork to regulators for an IPO, 1 month ago. But let’s start with a little part of history
Histoire
«From Harvard dorm room to all Canadian and US University :
Mark Zuckerberg, 28, founded Facebook while studying psychology at Harvard University. Zuckerberg had already developed a number of social-networking websites for fellow students, including Facemash, where you could rate people's attractiveness. In February 2004 Zuckerberg launched "The Facebook” with the help of Eduardo Saverin (business aspects), Dustin Moskovitz (programmer), Andrew McCollum (graphic artist). Within 24 hours, 1,200(one thousand two hundred) Harvard students had signed up, and after one month, over half of the undergraduate population had a profile. In March 2004, Facebook expanded to Stanford, Columbia, and Yale. It soon opened to the other Ivy League schools, Boston University, New York University, MIT, and gradually most universities in Canada and the United States. Facebook was then opened on September, 2006, to everyone of age 13 and older with a valid email address.
Chiffres clé
As of February 2012, Facebook has more than 845 million active users and in average Facebook’s user increase by 100(one hundred) million each 120 (one hundred twenty) days. Facebook it’s 1 of every 5 of all page views on Internet. It’s 250 (two hundred fifty) million photos uploaded daily, 78...

...FI516
IPO Paper
Identify the company and its industry.
Pandora Media, Inc. is an internet streaming radio service used by more than 80 million listeners. Pandora, which has a catalog of 800,000 songs from more than 80,000 artists, has roughly half the market for Internet radio in 2010, according to a study published in November by Ando Media. Though the service is wildly popular, it has yet to make a profit. The Internet radio station generates playlists based on a user's favorite artist or song.
As part of the company's Music Genome Project, songs are analyzed according to musical features -- including details of instrumentation, harmony, lyrics, melody, rhythm, and vocals. Users enter the name of a song, and Pandora creates a playlist of songs with similar characteristics. Pandora's service, free to its more than 80 million registered users and available only in the US, is supported by local and national advertising. Pandora chief strategy officer Tim Westergren founded the company in 2000 and it filed for an IPO in 2011.
Discuss important financial and other facts about the company from its SEC filings.
In its papers filed with the Securities and Exchange Commission, Pandora reported a $16.8-million loss on $55.2 million in revenue for its fiscal year ended Jan. 31, 2010. From Feb. 1, 2010 through Oct. 31, Pandora narrowed its losses to $328,000 on $90.1 million in revenue. Because Pandora is largely a free service, only 9% of its...

...IPO Process
Stock offered to public
Approval by SEBI
Draft Offer document filed with SEBI
Negotiate the deal
Investment Bankers
(Underwriters)
Company
SEBI Guidelines Regarding IPO
1. Eligibility Norms of the Issuer:
The company shall meet the following requirements –
* Net Tangible Assets≥ ` 3 crores (for 3 full years)
* Should have track record of profitability in 3 out of previous years
* Net worth ≥ ` 1 crore in three years
* If change in name, atleast 50% revenue for preceding 1 year should be from the activity under new name
2. Size of the Public Issue:
a. Issue of shares to public ≥ 25% of the total issue,
b. The issue size should not be more that five times the pre-issue net worth
3. Promoter Contribution:
c. Minimum Promoters contribution is 20-25% of the public issue.
d. Minimum Lock in period for promoters contribution is 5 years
4. Prospectus:
e. Abridged prospectus must be attached with every application form.
f. Risk factors must be highlighted
g. Objectives of the issue and the cost of...

...1. Why are the private equity sponsors pursuing an IPO of Hertz at this time – that is, what is the purpose of the IPO?
The sponsors wanted cash in order fund another special dividend. They felt that even though they had only owned the company for short time, they were in the perfect position to sell it. There are several reasons why 2006 was an opportune time for the IPO of Hertz. The market was on the rise with the S&P up over 10% on the year. The IPO market itself was incredibly strong, outperforming 2005 by November. As the case states “198 IPOs had price raisings approximately $41 billion. The pricing of IPOS also seemed solid. Of the 198 deals, the average first-day return (not annualized) was 8.8%. After four weeks, nearly 60% were trading above their offer prices”. Hertz was also recognized as one the top car rental brands in the world, it’s branding was dominant throughout North America, which in turn, gave it premium pricing power. At the time, Hertz also had the opportunity to expand in both the non-airport and equipment rental markets, which also has higher margins than general car rentals.
2. What are the differences between conventional IPOs and IPOs that arise from leveraged buyouts?
First of all, it appears that private equity-led IPOs (RLBOs) are more successful than their non-buyout-backed counter parts. According to the case...